Choosing the ideal home mortgage for first, second, jumbo refinance
Peter Oberois
May 18, 2005

There are thousands of mortgage brokers and bankers all around. Today mortgage brokering is the easiest way of making money. That is why there are more mortgage brokers than mushrooms in the market. Not all these brokers are bad but some definitely are. The business is controlled and regulated by the State you live in. There are many laws that protect you. Remember, you give a mortgage they give you a loan. Your mortgage stands as a guarantee or collateral for the loan you take. In other words, if you cannot pay or default, eventually they can foreclose and snatch your house away. You got to make sure you go to a mortgage banker and not a loan shark waiting for you to default.

Selecting the right mortgage can make you rich or poor on the long term. Continuous monitoring of your credit history and the interest rates will help you to seek and obtain the right mortgage whether it is the first, second or the refinance of previous mortgages.

Consolidating your current credit card and other unsecured loans and paying them off through a home mortgage can be a very smart move. This makes your loan interests tax deducible. Make sure you consult your accountant for that.

However, we find people refinancing is excited and happy for a while with a lot of cash all on a sudden. Then of course reality sets in – once the cash is spent in home furnishing or cars or boats or vacations, time come to repay the loan for a long time – the gloom and doom starts.

Selecting a mortgage broker is not easy. Please remember after you take the loan, the mortgage can be sold and transferred to another company. The mortgage processor normally will honor the original loan contracts. But it can be a nuisance to have the mortgage holder sell the instrument every three or four years.

Loan consolidation is a growing trend. Please remember in any loan, initially you pay very little on equity and most of it goes to interest. For example in a typical 30 year fixed mortgage, in the first seven years, hardly any equity is paid off.

A new trend is to take an interest only loan for the first five or seven years. The monthly payment is very low but you really do not pay anything towards any equity. In other words you still owe 100 percent of the value of the loan.

There is a term called negative amortization. There are situations when you may not pay enough even to cover the interest part of it and as a result your loan amount (principle) may be getting bigger. This primarily happens in one-year arm ir. Variable rate of interest that gets adjusted based on one year Tbill or Libor rate every year. You got to be careful about this if you are considering one-year adjustable mortgages.

The loan contract and the settlement document are very important. The most common mistake people make is not to read the contract properly and understand what they are getting into. If you do not read the contract, you will face surprise if ever you cannot pay the loan on time. Know you rights and privileges. Mortgage is an important issue. It can make you well of or financially struggling for a very long time.

Choosing the ideal home mortgage for first, second, jumbo refinance
Peter Oberois
There are thousands of mortgage brokers and bankers all around.
READ MORE>>

MORE ARTICLES >>